MKTG 3650 18th Edition Lecture 18 Outline of Last Lecture I. Segmentation, Targeting, and PositioningOutline of Current Lecture II. Requirements for Effective SegmentationIII. Target MarketingCurrent LectureRequirements for Effective SegmentationFor segments to be attractive, effective and viable as target markets, they should be –1) Measurable: The size, purchasing power, and customer profiles associated with the market segment must be “measurable”2) Accessible: Segments must exist within the effective and efficient reach of firms and their marketing mix efforts.3) Substantial: Large enough, profitable enough. 4) Differentiable: Does the segment respond in an identifiably different way than othersegments to my firm’s marketing mix efforts?5) Actionable: Can my firm design effective marketing mix programs that arespecifically designed for and attractive to members of the segment? Topic 2: Target Marketing: Assume that a large number of market segments have been identified, so many, in fact, have beenidentified that it is not reasonable to assume the firm can target each segment – or group ofpotential customers - effectively.- As I once heard a dieting woman say at a desert bar, “so many calories, so little time”;with the larger point being she could not/ should not possibly eat everything that shewanted on that bar. Nor, we should add, can a marketing firm effectively pursueeveryone it would like to eat, opps, I meant, “like to target”. Nor should it, for reasonsmentioned above.o You cannot eat everything you want. There is not enough time, or money orpounds to support such a decision. Neither can marketers … These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.- Target marketing: Evaluating the various segments that have been identified and decidingwhich ones to pursue. o Target marketing is where many marketing firms end up making or losing theirmoney.  Marketers should target segments that are most likely to respond favorablyto the values offered by their existing marketing mix. - See how logical all this is …  Or, marketers should target the market segment most likely to respondfavorably to a firm’s revised marketing mix – and its values - that a firmcan specifically create. Marketers can evaluate target segment ‘attractiveness’ by examining three factors: 1) Current Size & Future Growth Prospects (of the Segment); 2) Structural Attractiveness - a. Related to the Existence or Absence of: i. Powerful competitors; ii. Potential or actual substitute products; iii. The degree to which is it necessary to contract with powerful suppliersor vendors who exercise extreme control in the market? 1. Remember, from C2, when a firm chooses which segmentsto target, it is also choosing the firms it will competeagainst. 3) The degree to which the firm’s current Objectives & available Resources (i.e., itsTime, Talent, and Treasures – our 3 “T’s” [resources]) align - or match up - with whatwould be required (“value” or “value proposition wise”) to pursue this segmenteffectively. a. Question: Does our firm possess the capabilities and resources to serve thetargeted segment effectively? Firms can target at one of four different levels 1) Targeting very broadly – firms assume no segments exist.a. This is called undifferentiated (or mass) marketing. b. One market segment (e.g., the whole market), one product, one marketing mixapproach. c. Plan here: Focus is what is common or similar across consumers, i.e., they allneed … certain types of values – benefits – solutions… 2) Targeting narrowly – firms focus only on one segment a. This is called concentrated (or niche marketing) approach. b. Marketing firms target a very large share of narrowly defined markets, orsegments of potential buyers.c. Requires lot of fine tuning, of products, prices, and promotional or deliveryprograms to meet the needs of carefully defined segments. That is, requires a lotof fine tuning of the “marketing mix.” i. Smoking cessation products could fit here. 3) Targeting extremely narrowly (this is called Micro-Marketing) – only one segment istargeted, again, but one that is extremely narrowly defined segment. a. Entails the practice of tailoring products and marketing programs to suit thetastes, meet the needs, and solve the problems of highly specialized individuals orfirms. i. Loch-heed Martin exemplifies this… 4) A Differentiated Targeting Marketing Approach – entails targeting multiple segments,wherein each segment is targeted with a specific marketing mix.a. This is called differentiated (or segmented) marketing b. Here, the firm decides to target several (2, 3, 4) market segmentsc. The idea is to have differing market mixes unique targeted at each of the differingsegments that the firm chooses to pursuei. Each marketing mix should be strategically designed (i.e., mixed) suchthat it delivers unique - and uniquely desirable - value to members of thetargeted segment. d. This approach greatly increases costs of marketing. But it should greatly increaserevenues, as well. (Otherwise, why pursue a “differentiated targeting” strategy?) i. GM or Toyota each use this approach. ii. So does Brinker International, who offers Chilli’s, On the Border,Maggios, and (used-to-be) Macaroni Grill to the market. 1. And then, in turn, each of these restaurant options (or brand)also offer various healthy food, down-home-better-tastier-fattier-food, less expensive choices, more expensive choices, alldependent on the segment it is targeting inside the